Barack Obama's Slippery Fund-Raising Slope

On September 3, Michelle Obama, the wife of Democratic presidential candidate Barack Obama, flew into Los Angeles for a quick but profitable visit. After sitting for an interview with talk-show host Ellen DeGeneres, Obama attended back-to-back fund-raisers at the homes of Creative Artists Agency managing partner Bryan Lourd and actor Samuel L. Jackson. In just two or three hours, she pulled in a reported $1.5 million in campaign contributions for her husband. Thirteen days later, the candidate himself arrived in Beverly Hills, where he was serenaded by Barbra Streisand at the Regent Beverly Wilshire Hotel and Holly­wood stars wrote checks as large as $28,500 per person. The final tally for that evening was nearly $9 million for Obama’s coffers.

While big-money donors from the entertainment industry were handing over their cash, the Obama campaign also sent out e-mails to millions of ordinary Americans asking for whatever they could afford. Many of them responded, with contributions of $25 or $50. By the end of September, Obama’s fund-raising savvy earned him $150 million in small- and big-money donations — a record one-month haul for any presidential campaign.

The heavy emphasis on fund-raising, says Bill Whalen, a research fellow at the Hoover Institute, a public policy think tank at Stanford University, is a key part of a “multi-tiered strategy” for an Obama win. With a flush war chest — the candidate has raised a record $600 million — the Obama campaign has opened fully staffed offices in key battleground states, saturated TV, and constantly tested the messages in his ads.

“They’re trying to create an overwhelming force,” Whalen says, and they may have succeeded. According to polls, Obama’s tactics are working, and the Illinois senator looks set to be the next president.

But when, or if, Obama wins on Election Day, the millions of small-money donors won’t be the only people expecting certain things from the new president. Big-money supporters, who, according to national media outlets, have increasingly become major players in the Obama cash-production juggernaut, will want payback.

"We have seen time and time again that people who donate generously to a presidential campaign or a congressional campaign certainly have that person’s ear. They will get their phone calls returned," according to Mary Boyle, spokeswoman for Common Cause, a nonprofit, nonpartisan citizens’ lobbying group based in Washington D.C.

While Obama says he does not accept contributions from Washington lobbyists, that’s not much of a distinction these days. He has been accepting huge amounts from corporations, unions and endless special-interest groups. The influence of big-money donors in a possible Obama administration could create a political backlash if he doesn’t find a way to resist the enormous pressure that will be brought to bear.

“Doling out favors to special interests and big donors over small donors is a recipe for trouble for Obama,” warns Nick Nyhart, co-founder and president of Public Campaign, another nonprofit, nonpartisan group also based in the nation’s capital. “His mantra has been change and changing the way Washington works, and people will hold him to that.”

Although Obama would probably enjoy a long press honeymoon from a press corps that, according to the Los Angeles Times and Pew Research, is clearly favoring Obama over Senator John McCain in its news coverage, others will be ready to pounce, led by critics and good-government groups watching the first few months of Obama’s presidency, when political rewards are traditionally handed out fast and furiously.

In mid-June, Obama became the first presidential candidate of a major party to opt out of public financing since it was created in 1976, because it would have prevented him from taking private donations and spending more than $84.1 million.

“When you have the ability to exceed the [fund-raising] limit” by as much as Obama has, says Josh Israel, a project coordinator at the Center for Public Integrity, a nonprofit organization based in Washington, D.C., “it seems pretty obvious the system was not going to hold. It was too out of date.”

“Clearly, opting out of the system was the best choice for him,” says Tim Hodson, executive director of the Center for California Studies at Sacramento State University. “Years from now, I think Obama’s campaign will be seen as the most successful campaign in American history.”

But has Obama been too successful? In July, a few weeks before the Democratic National Convention, Obama and his handlers formed joint fund-raising committees through a loophole (ironically created by the McCain-Feingold Act) that allows individual donors to write checks far surpassing federal limits of $2,300 — if the money was shared between a candidate and his party’s national and state committees. As a result of the loophole, “[The party committees] are avenues for individuals and others to legally donate tens of thousands of dollars,” says Boyle of Common Cause. John McCain created a similar committee, using the very loophole he had authored.

Individual donors promptly began writing checks of $25,000 or more to Obama’s and McCain’s committees. Even as the world of high finance began its stunning Wall Street meltdown, the biggest check-writers to both men were executives from securities and investment companies, according to The New York Times. The entertainment industry was also a top contributor, vastly preferring Obama.

So-called bundlers also contributed heavily to both. These ultimate political insiders, who collect donations from wealthy friends, business associates and other contacts, locally included Hollywood moguls David Geffen and Jeffrey Katzenberg, both of whom have raised at least $500,000 for Obama, according to the Center for Responsive Politics.

Obama campaign spokesman Ben LaBolt insists to L.A. Weekly that such big money — there are prominent versions of Geffen and Katzen­berg in virtually every U.S. city — will not unduly influence Obama since “more than 3.1 million Americans” have given an average contribution of $86.

That’s been a great spin for the man the polls say is the presidential favorite. But in fact, only a quarter of his mountain of cash came from donors giving $200 or less. Washington Post reporters Sarah Cohen and Andrew Mosk caused something of a sensation in late October with their investigation showing that Obama was actually beaten by George W. Bush in 2004 in the percentage of money raised from small donors.

The implications of that fact have yet to sink in. “Ideally, contributions would come from Joe the Plumber,” says Hodson, “but more realistically, big-money donors make the major contributions.”

LaBolt says the shift in Obama’s fund-raising, from little guys to huge, will not change the senator’s plans to take on the loophole-filled fund-raising system. The spokesman cites Obama’s work with Russ Feingold to pass a law signed by President Bush last year that requires congressional lobbyists to disclose who they bundle money for.

And Nyhart of Public Campaign sees small donors as a new kind of pressure group that will create a “check” against an Obama administration, steering it away from business as usual even if the president falters. Says Nyhart, “If Obama ends up doing special-interest favors, it will create an intense conflict.”

Other experts aren’t so sure. Israel of the Center for Public Integrity says, “He’s still going to owe big-money donors.”

Whalen of the Hoover Insti­tute adds, “I’m a skeptic. An Obama presidency could be different, but I don’t see it. ...He hasn’t shown he’s uncomfortable with big money, He’s not a puritan on the money issue.”

Yet Hodson, who worked in the California Legislature for 20 years, thinks concerns about big-money donors are overblown — for a reason most voters might find discomfiting. Presidential candidates are so mired in huge contributions, he says, that no specific fat cat can command the stage. “In the ’50s, major contributors could say they gave the most money and then try to ask for something,” Hodson says. “No one has quite the same clout as they once did.”

However, Hodson acknowledges, “There will be low-lying fruit going to big donors,” often in the form of an ambassadorship. “If you go down the line,” agrees Bill Whalen, “they are usually fat-cat picks.”

President Ronald Reagan awarded Ronald Lauder, the billionaire heir to the Estée Lauder cosmetics fortune, the ambassadorship in Austria. President Bill Clinton picked for ambassador of Austria oil heiress Swanee Hunt. And President George W. Bush rewarded California billionaire Roger Arnall with the ambassadorship in the Netherlands.

“I find it hard to believe that any of those millions of [small donors] will get an ambassadorship” from Obama, says Josh Israel. “I also find it hard to believe that none of the bundlers will get an ambassadorship.”

Top contributors are often treated to a board membership at the John F. Kennedy Center for the Performing Arts, trips on Air Force One and overnight stays in the Lincoln bedroom. But the real influence can come from appointments to sometimes important commissions. “It would be an enormous change if Obama chose not to pay back big-money supporters in any of those ways,” Israel adds.

Israel says the Center for Public Integrity and other good-government groups will be watching closely. “You would want to see who his big appointments are, and how many of them are bundlers. That’ll be a pretty obvious sign that things haven’t changed too much.”

On the other hand, Obama can signal change by resisting the temptation to form mysterious, controversial, closed-door task forces similar to President George W. Bush’s “National Energy Policy Development Group,” which was created the second week Bush took office, was chaired by Vice President Dick Cheney, and met secretly with big-oil executives from Exxon-Mobil, Conoco and the Royal Dutch Shell Oil Corporation. “Obama can say he won’t do that,” Hodson says. “He can set the tone.”

While major oil companies, which did not contribute huge sums to the Obama campaign, probably won’t be demanding a presidential task force if Obama wins the White House, other wealthy supporters almost certainly will be calling with their wish lists.

Bob Stern, president of the Los Angeles–based Center for Governmental Studies, says watch for labor unions, trial lawyers and Wall Street executives to aggressively lead that charge if Obama is elected — not to mention the honchos at Fannie Mae, who might go in the other direction, resisting a commission investigation into the disastrous lending practices and alleged cover-up of bad loans, which fed the subprime-mortgage debacle and led to the ouster of top Fannie Mae executives.

Earlier this year, Obama hurriedly fired his just-named vice-presidential search committee chairman, James Johnson, after major newspapers reported that Johnson, as a Fannie Mae executive, accepted huge payouts based on alleged accounting manipulations, and got personal home loans below market rates from the subprime-mortgage lender Countrywide Financial. Critics will be watching closely to see if President Obama tries to paper things over at Fannie Mae.

According to Stern, an expert on campaign-finance reform, labor unions, which have helped Obama through millions of dollars in donations to independent committees, will probably seek changes to the North American Free Trade Agreement — no small thing. Bill Clinton infuriated unions by pushing bipartisan backing of the free-trade deal. For Obama to unwind it in some way would almost certainly put him at odds with thousands of business leaders, among others.

Trial lawyers, who have sent millions of dollars to Obama, will want “to make sure there’s not more eroding of punitive damages” to plaintiffs, Stern says. And Wall Street executives, who have thrown millions at the Obama campaign, will want to keep the new president from “too aggressively tamping down their salaries.” Stern says Obama needs to handle these constituencies “carefully.” If he fails to do so, and if the media go after Obama for failing, the new president could quickly turn off the average American.

“The first reaction will be ‘politics as usual,’” says Stern, “and then the public will think he’s not as idealistic as they thought he would be. They’ll think he’s just another politician.”

Stern adds, “Obama is bound to disappoint,” predicting, “he’ll probably have a honeymoon of 30 days instead of 100 days.”

Josh Israel disagrees, saying a political back­lash will only get traction if Obama mis­steps wildly. “It depends on what kind of favors he’s doling out,” Israel says. “The Ameri­can public pays more attention to things like the energy task force with Bush or when Clinton allowed people to sleep in the Lincoln bedroom. The question is whether people are given special access or relatively superficial things.”

Nick Nyhart believes a victorious Obama must address the influence of big money within the first few months. If Obama “doesn’t lay out his plan for change in Washington,” Nyhart says, “he will ignore a large chunk of his platform that got him elected.”

Nyhart himself is one of those who hopes to pressure Obama should he be elected. He expects Obama to establish a better system of public financing for elections and push forward legislation that “runs counter to the interests of big oil, big health-care corporations and Wall Street.”

And Julie Rajan, executive director of the Los Angeles–based California Clean Money, which advocates public financing of campaigns, wants Obama or McCain to “completely overhaul” the system. “If we take away that need for big money in the first place,” Rajan reasons, “then [politicians] will not be beholden to major donors.”

She says both candidates are capable of tackling such change, but notes, “whether they have the will is another question.”

On October 26, Obama walked onto the stage at Civic Center Park in Denver, to greet a crowd of 100,000. “Goodness gracious,” Obama said, as he surveyed the scene.

The show of support, though, should not have been surprising. The Obama campaign arrived in Colorado months earlier, setting up more than 40 field offices, compared to McCain’s dozen or so. It spent millions of dollars on TV ads wooing Latino voters, and on flying Michelle and Barack Obama into Colorado for regular visits. Although McCain was leading slightly in the state in early August, Obama had, by late October, moved ahead by 12 percentage points.

The Illinois senator’s strategy to be an overwhelming force had obviously paid off.

But as Obama addressed the Denver crowd, he didn’t talk about his record-setting fund-raising totals or the need to change the influence of big-money donors on Washington. He spoke about taking on insurance companies, ending the country’s reliance on foreign oil, and ending tax cuts for companies that ship jobs to other countries — initiatives that would rile some of Washington’s biggest lobbying groups, which donate millions of dollars to presidential and congressional campaigns and will fight any change in the way they do business.

If Obama wins and tries to keep his campaign promises, the test will be whether he resists wealthy special interests. And both his backers and his detractors will be observing him with the same question in mind: Can the latest president to ride into the White House on a sea of special-interest money break the old, shatterproof mold?